SINGAPORE — To prevent a glut in the public and private housing markets, the Government will further reduce the supply of Build-to-Order (BTO) flats and land sales for private properties.
Minister for National Development Khaw Boon Wan announced the reduction in BTO supply during his appearance on Channel 8’s Hello Singapore programme yesterday.
The supply of BTO flats for this year was reduced to 22,400 units, from 25,000 per year in the previous three years.
Mr Khaw said the number of new BTO flats launched next year would be cut by another 25 per cent to about 16,000 flats, with the number of BTO exercises reduced from the current six a year to four.
There will be a BTO exercise once every quarter instead of once every other month. The number of flats per exercise will hold steady at 4,000.
Speaking to reporters after the programme, Mr Khaw said: “As you know, because of the great shortage, we had to ramp up (supply) very rapidly … But obviously, we cannot carry on like this, it may cause a big problem. So this year, we have started to taper … Then next year, we have decided to further reduce by another 25 per cent.”
He added that the amount of land offered under the Government Land Sales (GLS) programme would also see further cuts. Details were not provided, but the minister said the Government would “have to be careful not to overdo it”.
“The (HDB and private property) markets are linked. So, just as we need to reduce BTO, we have also been progressively bringing down the Urban Redevelopment Authority land sales for executive condominiums, for private condos. So this year, we made a small adjustment of reduction. Next year, we will go a bit further,” he said.
The Government announces the amount of land for sale under the GLS twice a year. In the latest launch in June, the sites on offer could yield an estimated 3,915 private homes, down from the estimated 4,630 units previously.
Despite the recent decline in private property prices, the figures are still around 50 per cent above the lows in 2009.
Hence, it is still not the right time to wind down cooling measures, said Mr Khaw, adding that there is still room for prices to moderate, given that income levels had grown only 30 per cent during the same period.
“Cooling measures are something we will have to relook sooner or later, but I think now is not the time yet … Prices have come down, the market is turning into a buyer’s market and sellers now have to be more realistic,” he said.
Analysts whom TODAY spoke to said the move by the Government is timely, as pent-up demand for HDB flats would have been met by the more than 77,000 flats that came into the market between 2011 and last year.
Associate Professor Sing Tien Foo, deputy head (administration and finance) at the National University of Singapore’s Department of Real Estate, said: “It is time to adjust the stock. The Government has been pumping up the supply of new flats for the past three years, so this is timely. Looking at the last BTO launch, the (application rates) look quite comfortable so, moving forward, it’s good to supply at a more moderate pace.”
“If we look at the number of marriages per year, it’s about 15,000 to 16,000, so I think the 25 per cent reduction is still quite comfortable,” he added.
On the private-property front, Century 21 chief executive Ku Swee Yong cautioned that with developers still hungry for land, a decrease in supply might instead drive up prices.
“The GLS programme is actually a good tool to keep prices in check for the long-term stability of the market. If developers know there won’t be as many sites on offer, that may push up land prices and this cost will be passed on to consumers,” he said.